Download Nucleus Onshore Bond account

Scottish Friendly
Nucleus Onshore Bond account
Plan Conditions
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SFTPIA07/07 Nucleus
TABLE OF CONTENTS
Overview of Main Plan Features
1.
GENERAL DETAILS
1.1.
1.2.
1.3.
1.4.
1.5.
2.
FUND DETAILS
2.1.
2.2.
2.3.
2.4.
2.5.
2.6.
2.7.
2.8.
3.
The Bond
Statutory Provisions
Payment of Benefits
Definitions
General
The Funds
Investment Linked Funds
Valuation of Investment Linked Funds
Management Charge on Investment Linked Funds
Unit prices
Choice of Funds for Allocation and Cancellation of Units
Switching of Funds
Delayed Cancellation
BOND TAXATION
3.1. General
3.2. Calculation of the Tax Liability
3.3. Deduction of the Tax Liability
4.
INVESTMENT AND BENEFIT DETAILS
4.1.
4.2.
4.3.
4.4.
4.5.
Payment of investments
Allocation of Units
Benefits Payable on Death
Cashing in
Withdrawals of capital option
Overview of Main Plan Features
Nucleus Onshore Bond account (the Bond) has been set up by Scottish Friendly Assurance Society
Limited (‘Scottish Friendly’). The Account is administered by Nucleus Financial Services.
Any enquiries about the Bond generally or about your entitlement to benefits under the Bond should be
addressed to Scottish Friendly (Nucleus Onshore Bond account) at Scottish Friendly's Head Office,
Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.
This overview sets out the most important aspects likely to affect your investment in the Bond.
WHEN YOU WANT TO ALTER YOUR BOND OR ARRANGE PAYMENTS, YOU SHOULD
CONTACT YOUR INDEPENDENT FINANCIAL ADVISER OR NUCLEUS.
The Bond is a non-qualifying life bond in terms of the Income and Corporations Taxes Act 1988 issued
by Scottish Friendly and subject to the policy conditions as set out in this document.
The Bond can be used to invest in a range of unitised life funds offered by Scottish Friendly. Scottish
Friendly will pay all appropriate taxes as the liability arises on each asset within the Bond and a Tax
Liability will be deducted from the Bond as assets are encashed.
All investments within the Bond are subject to the minimum contribution as specified from time to
time by Scottish Friendly. Similarly all benefits taken from the bond are subject to the minimum
amount as specified from time to time by Scottish Friendly.
On your death, 100.1% of the value of units in the Bond (minus any Tax Liability) shall be paid to your
estate.
The Bond can be set up on the basis of a series of separate identical policies, known as individual
clusters. Any instruction given by the Policyholder in accordance with the Policy Conditions shall
apply in identical terms to each of the individual clusters except that the Policyholder may instruct that
any one or more of the individual clusters may be cashed in.
The Bond can be set up on a Single Life, Joint Life (first death), Joint Life (second death), or multiple
life (last death) basis.
The Life (Lives) Assured under the Bond may or may not be the Policyholder, however the
Policyholder must have an insurable interest in the Life (Lives) Assured.
The actual set up of the Bond shall be expressly set out in the Schedule of each Bond.
TAKING BENEFITS
Benefits may be taken at any time by either:
•
•
•
Cashing in the entire Bond.
Cashing in one or more individual policies.
Withdrawing capital across the entire Bond, i.e. each individual policy.
However benefits are taken Scottish Friendly will deduct a Tax Liability from the Bond before benefits
are paid.
DEATH
If the Bond Schedule notes that the Bond is set up on a Single Life basis then in the event of the death
of the Life Assured the Bond shall be valued at the date of death as the value of units within the Bond
minus any Tax Liability multiplied by 100.1% and paid to the Policyholder or the Policyholder’s estate.
If the Bond Schedule notes that the Bond is set up on a first death basis then in the event of the death of
any one of the Lives Assured the Bond shall be valued at the date of death as the value of units within
the Bond minus any Tax Liability multiplied by 100.1% and paid to the Policyholder or the
Policyholder’s estate.
If the Bond Schedule notes that the Bond is set up on a second death basis then in the event of the death
of both of the Lives Assured the Bond shall be valued at the date of death of the last Life Assured to
die as the value of units within the Bond minus any Tax Liability multiplied by 100.1% and paid to the
Policyholder or the Policyholder’s estate.
1. GENERAL DETAILS
1.1 The Bond
Within the Bond the Policyholder shall have one or more individual polices as determined by
Scottish Friendly. Each individual policy is a non qualifying life policy of assurance issued by
Scottish Friendly and referred to in the Bond Schedule.
The Bond is evidence of a contract between the Policyholder and Scottish Friendly and is
based on the Application and Declaration made by the Policyholder on the First Application
Date shown in the Bond Schedule and any associated Application(s) and Declaration(s) made
by the Policyholder.
Each Plan consists of and is subject to:
(a) the Schedule,
(b) these standard Plan Conditions (“the Plan Conditions”) bearing the Reference shown on
the Schedule,
(c) the statutory provisions laid out in Section 1.2 of this document.
1.2 Statutory Provisions
Each Bond is issued by Scottish Friendly and is a non-qualifying life policy as defined in the
Income & Corporations Taxes Act 1988.
In the event of:
(a) Scottish Friendly ceasing to be an authorised Friendly Society; or
(b) any change or anticipated change in legislation which makes it impracticable to carry out
the Bond Conditions; or
(c) a change in the basis of taxation of Scottish Friendly or non-qualifying life policies; or
(d) Scottish Friendly being required by law to pay any sum in respect of the Bond to any
government agency; or
(e) a change in market conditions; or
(f) any recommendations by the Financial Services Authority; or
(g) any changes to Scottish Friendly's systems, methods of operation, services or facilities; or
(h) any mistake being discovered;
Scottish Friendly will make such alterations to the Plan Conditions or to the units allocated to
the Bond as it considers necessary.
1.3 Payment of Benefits
Scottish Friendly will pay any benefits under the Bond in accordance with the Rules as stated
in the Schedule. Such payment will be made by Scottish Friendly subject to:
(a) due payment of investment(s);
(b) delivery of the Plan documents listed in 1.1 to Scottish Friendly; and
(c) satisfactory proof being provided to Scottish Friendly in relation to
(i) the happening of any event on which sums become due under the Bond, and
(ii) the title of the claimant, and
(iii) the correctness of the stated date of birth of the Investor.
Scottish Friendly will deduct from any benefits payable, any Tax Liability for which it may
become liable in consequence of such payment.
1.4 Definitions
The following terms will have the following meanings throughout these Plan Conditions.
“Policyholder” means the person named in the Schedule, this will normally be the proposer of
the application except where the policy has been issued under Trust when the Policyholder
will mean the Trustees.
“Life Assured” means the person(s) upon whoes death the Bond may be terminated.
“Appropriate Life Assured” means the person(s) upon whoes death the Bond will be
terminated as defined by the basis of death benefit in the Bond Schedule.
“Bond” means the non-qualifying policy of assurance constituted by the Plan documents listed
in section 1.1 of these Plan Conditions, and effected through the Nucleus Onshore Bond
account within the Nucleus wrap.
“Bond Schedule” means the Schedule appended to these Plan Conditions and bearing the
Investor’s name. It includes any amendments made thereto after the issue of the Plan.
“Cash in date” means the date upon which the Policyholder decides to cash in some or all of
their individual policies or the Bond.
“Gross Bond value” means the value of the Bond before the deduction of the Tax Liability.
“Fund” means a Scottish Friendly life fund which may or may not be linked to an underlying
investment fund with a management group outside of Scottish Friendly group.
“Net Bond value” means the value of the Bond after the deduction of the Tax Liability.
“Individual Policy” means the separate and identical individual arrangements within each nonqualifying policy of assurance constituted by the Plan documents listed in section 1.1 of these
Plan Conditions.
“Investment” means contributions by the Policyholder into the Bond.
“Scottish Friendly” means Scottish Friendly Assurance Society Limited as insurer and
provider of the Bond.
“Tax Liability” means the amount of debt (or credit) within the Bond based on the
accumulated amount of tax paid (or reclaimed) by Scottish Friendly on behalf of the units
within the Bond plus interest at rates determined by Scottish Friendly from time to time.
1.5 General
Where appropriate in these Plan Conditions, words in the singular will include the plural and
the masculine will include the feminine and vice versa in both cases.
Instructions to deal with the Plan will be made in such a form as Scottish Friendly may
prescribe and will be subject to such restrictions as Scottish Friendly has imposed.
The law of contract will be that of Scotland unless otherwise stated in the Special Provisions
section of the Schedule.
By payment of the first investment and issue of the policy constituting the Plan the Investor, as
detailed in the Schedule, becomes a member of Scottish Friendly under Rule 2 of the Society.
2. FUND DETAILS
2.1 The Funds
Scottish Friendly will maintain a number of distinct Investment-Linked Funds ("the Funds")
relating to life business. Each Fund will be divided into accumulation and such other types of
units as Scottish Friendly may determine, and units of a particular type will be of equal value.
Scottish Friendly reserves the right to consolidate or subdivide units at any time. Benefits under
the Plan are specified in terms of these units but this does not confer the right to hold the units
directly and the assets of each Fund will remain the property of Scottish Friendly. Scottish
Friendly may reassure the Funds in whole or in part. Scottish Friendly reserves the right to
introduce further Funds, or to subdivide, close or merge existing Funds.
2.2 Investment Linked Funds
(a) No Units will be created in a Fund unless assets equivalent to these units are added at the
same time to that Fund. No assets will be withdrawn from a Fund except as in sub-section
(b) unless units equivalent to these assets are cancelled at the same time.
(b) The investment of the Funds will be at the discretion of Scottish Friendly, which may
borrow money for any other Fund on the security of the assets of that Fund. Investment
income from the assets of each Fund will be credited to that Fund. Scottish Friendly may
withdraw from each Fund the amount it considers appropriate in respect of the following:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Management charges as described in Section 2.4 of these Plan Conditions.
Expenses, taxes, duties and other charges for acquiring, managing, maintaining,
valuing and disposing of assets.
Interest on monies borrowed on account of the fund, including interest due on monies
borrowed from any other Fund.
Any taxes or other charges on Fund income or on capital gains in respect of the assets
of the Fund.
A proportion of any tax, levy or other charge on Scottish Friendly, the Bond
Administrator or the Bond.
Any expenses, tax duties or other charges incurred in connection with the Funds and
not previously taken into account.
2.3 Valuation of Investment Linked Funds
(a) Each Fund will be valued at least once in each calendar month.
(b) Scottish Friendly will derive the maximum and minimum value of a Fund from the
corresponding values of the assets reduced by all loans charged against the Fund and with
appropriate allowances for uninvested cash, accrued income and accrued or prospective
charges.
(c) The maximum value of an asset of a Fund will not exceed the market price at which it
might be purchased and the minimum value will not be less than the market price at which
it might be sold.
(d) The values of Stock Exchange securities will be based on quoted prices.
(e) The values of real or heritable property will be based on valuations prepared and certified
by an independent valuer appointed by Scottish Friendly and adjusted to allow for
variations in property prices since the last such valuation.
(f) The values of all other assets will be determined by Scottish Friendly.
2.4 Management Charge on Investment Linked Funds
At each valuation Scottish Friendly will deduct from the parts of each Investment Linked Fund,
represented by accumulation units, a management charge calculated as a proportion of the
current maximum value of the relevant part of the Fund in question excluding any units held by
any other Fund. The charge for each day since the previous valuation will be 1/365th, in respect
of that part of the Fund represented by accumulation units, of 1.5% or such other percentage
for that Fund as Scottish Friendly may specify.
Scottish Friendly reserves the right to increase the management charge, for example if costs of
administration are higher than assumed or additional, unforeseen, costs are incurred as a result
of changes in legislation.
2.5 Unit Prices
Unit prices will be calculated for each Fund at each valuation. The price of each type of unit in
a Fund will be calculated by Scottish Friendly and will be no less than the minimum value, and
no more than the maximum value, of the part of the Fund attributable to that type of unit after
deduction of management charges divided by the number of units of that type in the Fund, the
result being rounded down by not more than 0.1p. The actual price may vary above this level.
All amounts arising from rounding up or down of unit prices will accrue to Scottish Friendly.
In all transactions involving the allocation or cancellation of units under the Plan, the number
of units will be rounded to the nearest 1000th.
2.6 Choice of Funds for Allocation and Cancellation of Units
On receipt of an investment in the Bond, units will normally be allocated in accordance with
the Policyholder’s (or the Policyholder’s advisor's) instructions.
In the absence of any valid instructions from the Policyholder’s (or the Policyholder’s
advisor's), contributions will be held in cash until valid instructions are received.
2.7 Switching of Units
(a) The Investor may instruct Scottish Friendly that the allocation to one or more of the Funds
is to be cancelled and the value of the cancelled units less the charge, if any, Scottish
Friendly makes for this switch is to be allocated to units of the same type in another Fund
or Funds.
(b) For the purposes of such a switch, cancelled units and allocated units will be valued at the
first unit price calculation after the receipt of the request at Scottish Friendly’s Head Office
or on some other date at Scottish Friendly’s discretion.
(c) Scottish Friendly reserves the right to defer the switch in terms of Section 2.8 of these Plan
Conditions.
2.8 Delayed Cancellation
Scottish Friendly reserves the right to defer for not more than six months the cancellation of
units in a Fund which, directly or indirectly, holds assets in the form of real or heritable
property, and not for more than one month in other cases. The unit prices applicable to the
deferred transactions shall be those prevailing at the expiry of the period of deferment.
3. BOND TAXATION
3.1 General
Scottish Friendly shall not normally deduct taxation from the individual investment linked
funds but shall from time to time calculate an individual Tax Liability due for each Bond. The
calculation of a tax charge between points in time shall be based on the growth of the fund
after allowing any growth due to dividends which have already paid taxation and the tax rate
which shall apply from time to time as decided upon by Scottish Friendly.
3.2 Calculation of the Tax Liability
(a) Investment linked fund – dividend level,
Scottish Friendly shall from time to time asses each investment linked funds and determine
the amount of growth (if any) which is in respect of dividends which have already paid UK
corporation tax. This estimated level of dividend growth will be deducted from any gains or
losses for the purposes of the calculation of a Tax Liability.
The estimated dividend level for each fund shall be published from time to time by Scottish
Friendly.
(b) Tax Liability – indexation allowance
Scottish Friendly shall from time to time determine the extent to which each investment linked
fund may benefit from indexation allowance. The amount of indexation allowance shall be
determined by Scottish Friendly and will be based on the published Retail Prices Index for the
previous 12 month period. This estimated level of indexation allowance will be deducted
from any gains or losses for the purposes of the calculation of a Tax Liability.
(c) Tax Liability – tax rate
Scottish Friendly shall from time to time determine the rate of tax which shall apply to any
growth between two points in time, this shall be based on UK Corporation Tax rates and any
allowance for expenses deemed necessary by Scottish Friendly.
(d) Tax Liability – growth
The growth in the Bond, which is assessed for taxation, shall be calculated after deducting the
value of any new investments made and adding back any withdrawals or charges taken
between the two points in time. Should assets be switched between the investment linked
funds between the two points in time then the time weighted average of the appropriate
indexation allowance and dividend level for each fund shall apply in this calculation.
(e) The accumulation of Tax Liability over time
After the calculation of the Tax Liability between two points in time this shall be added to the
Bond’s running Tax Liability which shall increase at the rate of interest as determined from
time to time by Scottish Friendly. The rate of interest shall be the same whether the Tax
Liability is in credit or deficit.
3.3 Deduction of the Tax Liability
The Tax Liability shall normally be deducted from the value of the Bond upon encashment of
the entire Bond.
The Tax Liability can be reduced at the request of the investor by the cancellation of units of
equivalent value to the amount of the Tax Liability to be reduced. In the event of the Tax
Liability reaching a value of greater than 10% of the assets held within the Bond then the
investor shall be required to reduce the Tax Liability to 5% of the assets held within the Bond.
In the event of the Tax Liability being negative (that is that money is owed to the
Policyholder) then the Gross Bond Value will be enhanced to the Net Bond Value.
4. INVESTMENT AND BENEFIT DETAILS
4.1 Payment of investments
An investor may pay into the plan any amount they require provided it exceeds or is equal to
the minimum investment as defined by Scottish Friendly from time to time.
4.2 Allocation of Units
On receipt of an investment, accumulation units will be allocated to the Bond by dividing the
appropriate contribution for each Fund by the allocation unit price of that Fund. The percentage
of each contribution to be allocated to units will be indicated on the Plan Schedule.
The unit price to be used is that obtained from the unit price calculation immediately following
receipt of the contribution by Scottish Friendly, provided the Bond is in force or can be brought
into force on the date of receipt. If this is not possible, the unit price to be used may be that for
a later date up to the date following that on which the policy can be brought into force, at the
discretion of Scottish Friendly.
4.3 Benefits Payable on Death
On the date of notification of the death of the appropriate life assured the Bond will be
terminated and the death benefit, equal to the value of the units allocated to the Plan at their
price on the date of notification, the deduction of the Tax Liability and multiplied by 100.1%
will be payable to the Policyholder (or the Policyholder’s estate).
The Bond may be set up on a Single Life, Joint Life (first death), Joint Life (second death),
Multiple Life (last death) provided the Policyholder has an insurable interest in each life
assured. In the case of Single Life the appropriate life assured is the only life assured noted in
the Bond Schedule. In the case of Joint Life (first death) the appropriate life assured is the first
of the two lives assured to die. In the case of Joint Life (second death) the appropriate life
assured is the second of the two lives assured to die. In the case of Multiple Life (last death)
the appropriate life assured is the last to die of all the lives assured named in the Bond
Schedule.
4.4 Cashing in
The Policyholder may at any time instruct Scottish Friendly, in a form prescribed by Scottish
Friendly, that they wish to cash in part or all of their Bond or a selected number of individual
policies.
Scottish Friendly shall effect this cashing in by cancelling the appropriate units in the Funds
requested by the investor and deducting any Tax Liability. If the Policyholder does not
designate units to be cancelled then they shall be cancelled at the discretion of Scottish
Friendly.
The value of any units cancelled shall be an amount equal to the bid value of those units.
Scottish Friendly may decline a cash-in request of anything other than a full cash-in should the
remaining value of the Bond fall below a minimum decided upon from time to time by Scottish
Friendly.
The cash-in will be effected from the Bid price of units calculated on the day following a
request to surrender.
4.5 Withdrawals of capital option
The Policyholder may at any time instruct Scottish Friendly, in a form prescribed by Scottish
Friendly, that they wish to withdraw part of their capital from the Bond. The withdrawal shall
be made equally across each Individual Policy.
Scottish Friendly shall effect this withdrawal by cancelling units in each Individual Policy and
deducting any Tax Liability. The value of any units cancelled shall be an amount equal to the
bid value of those units.
The withdrawal will be effected from the Bid price of units calculated on the day following a
request to surrender.